TOPIC 7: QUICK REFERENCE TO “Basics related with DIVIDEND”

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Quick Reference to "Basics related with Dividend" :-
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Legal Provision:-
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Companies ( Declaration and Payment of Dividend) Rules, 2014.
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Section 2(35), 123, 124,125,126 127, 51, of Companies Act, 2013.
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Various IEPF rules, 2016.
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Points:-
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1. Dividend is the return on Shares paid to the members of the Company.
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2. Preference shareholders have preference over equity shareholders in payment of Dividend.
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3. Section 8 Companies are not allowed to pay Dividend.
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4. Dividend once declared becomes a debt for the Company.
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5. Types:-
# Final Dividend
#Interim Dividend.
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6. Final Dividend is recommended by Board of Directors and Declared by Shareholders in AGM.
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7. Interim Dividend is declared by Board of Directors during any Financial Year.
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8. Dividend Amount should not exceed which is recommended by BOD.
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9. A Company cannot pass a resolution of Declaration of Dividend without passing for Adoption of Annual Accounts.
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10. Securities Premium Amount cannot be used for Dividend Distribution.
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11. Dividend can be paid by Cash, Cheque, ECS, Warrant.
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12. Interim Dividend can be paid out of Current Years Profit.
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13. Amount must be deposited in a separate bank account within 5 days of Declaration.
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14. If Dividend is not paid or Claimed then it should be transferred to the "Unpaid Dividend Account" within 30 days from Declaration.
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15. If money remains Unpaid or unclaimed for 7 years then it should be transferred to Investor Education and Protection Fund.
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16. Dividend should be rounded off to nearest rupees.

17. If there are Joint Shareholders then, it should be paid to the person whose name is first Registered.
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18. Company can pay Dividend out of capital profit but that profit should actually realized and AOA should authorized.
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19. Dividend cannot be paid by revaluation of Assets.
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20. Dividend is a Appropriation of Profit.
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Regards,
ACA SOURAV BAGARIA